1¾ « ˆa ‹ » » ¿ Á Á g:appsdatafnormal...jun 09, 2017 · pinecrest lakes academy (a...

Pinecrest Lakes Academy (A charter school and Component Unit

of the School Board of Lake County, Florida)

WL# 9041

Minneola, Florida

Financial Statements and Independent Auditors' Report

June 30, 2019

TABLE OF CONTENTS

General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Independent Auditor’s Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 Management’s Discussion and Analysis (Required Supplementary Information) . . . . . . . . . . . . . . . . . . . .

4-8

Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Statement of Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Fund Financial Statements: Balance Sheet - Governmental Funds. . . . . . . . . . . . . . . . . . . 11 Reconciliation of the Governmental Fund Balance Sheet to the Statement of Net Position. . . . . . . . . . . . . . . . . .

12

Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds. . . . . . . . . . . . . . . . .

13

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities. . . . . .

14

Statement of Net Position – Fiduciary Funds. . . . . . . . . . . . . . 15 Notes to the Basic Financial Statements . . . . . . . . . . . . . . . . . . . 16-27 Required Supplementary Information: Budgetary Comparison Schedules. . . . . . . . . . .. . . . . . . . . . . . 28-29 Independent Auditor’s Report on Internal Control Over Financial

Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards. . . . . . . . . . . . . . . . . . . . . . . .

30-31

Management Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-35 Management Response. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.)

WL# 9041

14012 Old Highway 50, Minneola, FL 34711

2018-2019

BOARD OF DIRECTORS Judith Marty, Chair and President, Director Shannie Sadesky, Vice-Chair, Director Juan Molina, Secretary, Director Carlos Alvarez, Director Erin Demirjian, Director

SCHOOL ADMINISTRATION Christina Alcalde, Principal

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Pinecrest Lakes Academy Minneola, Florida

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Pinecrest Lakes Academy (the “School”), a charter school under Pinecrest Academy, Inc., which is a component unit of the District School Board of Lake County, for the year ended June 30, 2019, and the related notes to the financial statements which collectively comprise the School’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the remaining aggregate fund information of Pinecrest Lakes Academy as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters As described in Note 1, the accompanying financial statements referred to above present only the financial position of Pinecrest Lakes Academy as of June 30, 2019, and the respective changes in financial position for the year then ended, and is not intended to be a complete presentation of Pinecrest Academy, Inc. These financial statements do not purport to and do not present fairly the financial position of Pinecrest Academy, Inc. as of June 30, 2019 and its changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 4 through 8 and 28 through 29 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2019, on our consideration of the School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control over financial reporting and compliance.

Coral Gables, Florida CERTIFIED PUBLIC ACCOUNTANTS September 30, 2019

4

Management’s Discussion and Analysis Pinecrest Lakes Academy

(A Charter School under Pinecrest Academy, Inc.) June 30, 2019

The corporate officers of Pinecrest Lakes Academy have prepared this narrative overview and analysis of the School’s financial activities for the fiscal year ended June 30, 2019. Financial Highlights

1. The net position of the School at June 30, 2019 was $474,364. 2. At year-end, the School had current assets on hand of $630,751. 3. The School had an increase in its net position of $85,930 for the year ended June 30,

2019. 4. The unassigned fund balance at year end was $325,223.

Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the School’s basic financial statements. The School’s financial statements for the year ended June 30, 2019 are presented in accordance with GASB Codification Section 2200. The financial statements have three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the School’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the School’s assets and deferred outflows of resources and liabilities and deferred inflows of resources. The difference between the four is reported as net position. Over time increases or decreases in net position may serve as an indicator of whether the financial position of the School is improving or deteriorating. The Statement of Activities presents information on how the School’s net position changed during the fiscal year. All changes in net position are reported when the underlying event occurs without regard to the timing of related cash flows. Accordingly, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The government-wide financial statements can be found on pages 9-10 of this report. Fund Financial Statements A “fund” is a collection of related accounts grouped to maintain control over resources that have been segregated for specific activities, projects, or objectives. The School like other state and local governments uses fund accounting to ensure and report compliance with finance-related legal requirements.

5

All of the funds of the School are governmental funds. Governmental Funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Governmental Fund financial statements, however, focus on near-term inflows and outflows of spendable resources, as well as on the balances of spendable resources which are available at the end of the fiscal year. Such information may be used to evaluate a government’s requirements for near-term financing. The Board of the School adopts an annual appropriated budget for its major governmental funds. A budgetary comparison statement has been provided for the major governmental funds to demonstrate compliance with the School’s budget. The basic governmental fund financial statements can be found on pages 11 - 15 of this report. Notes to Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 16-27 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a charter school’s financial position. In the case of the School, assets exceeded liabilities by $474,364 at the close of the fiscal year. A summary of the School’s net position as of June 30, 2019 and 2018 follows:

2019 2018Cash and cash equivalents 159,401$ 58,588$ Investments 396,000 106,000 Prepaid expenses and other current assets 59,898 75,142 Due from other agencies 15,452 452,606 Deposits receivable 31,430 31,430 Capital assets, net 757,813 846,645 Total Assets 1,419,994 1,570,411

Deferred outflows of resources - -

Salaries payable and wages payable 155,327 87,391 Accounts payable 90,303 35,584 Due to Pinecrest Academy, Inc. 700,000 1,059,002 Total Liabilities 945,630 1,181,977

Deferred inflows of resources - -

Net Position:Net investment in capital assets 328,047 375,291 Unrestricted 146,317 13,143 Total Net Position 474,364$ 388,434$

At the end of the year, the School is able to report positive balances in total net position.

6

A summary and analysis of the School’s revenues and expenses for the years ended June 30, 2019 and 2018 follows:

2019 2018REVENUES Program Revenues Federal sources 87,418$ 440,085$ Capital grants & contributions 399,838 129,949 Lunch program 180,146 110,060 Charges for services 152,874 84,177 General Revenues Local sources (FTE non specific) 3,910,585 2,685,766 Other revenues 60,588 57,968 Total Revenues 4,791,449$ 3,508,005$

EXPENSESComponent Unit Activities: Instruction 2,450,878$ 1,644,128$ Student support services 32,831 10,551 Instruction staff trainning 4,479 - Board 33,558 19,653 School administration 509,809 376,786 Fiscal services 88,350 62,775 Food services 237,325 143,468 Central services 115,766 84,336 Operation of plant 1,042,048 627,123 Maintenance of plant 149,485 121,390 Community services 40,990 29,361 Total Expenses 4,705,519 3,119,571 Increase/(Decrease) in Net Position 85,930 388,434 Net Position at Beginning of Year 388,434 - Net Position at End of Year 474,364$ 388,434$

The School’s revenues and expenditures increased by $1,283,444 and $1,585,948, respectively as a result of increased student enrollment. The School had an increase in its net position of $85,930 for the current year. Achievements In 2019, Pinecrest Lakes Academy completed its 2nd year of operations, serving 588 students in grades K-6. The School earned a letter grade of “A” for the second year in a row, ranking among the top performing schools in Lake County. Pinecrest Lakes Academy’s curriculum focuses on Science, Technology, Engineering, Arts, and Mathematics (STEAM). Pinecrest Lakes students are exposed to a multitude of curricula, which encourages them to utilize high-order skills and problem solving strategies. Pinecrest Academy, Inc. has created a college prep culture amongst all their schools, where high expectations are set for all stakeholders. Additionally, Pinecrest Lakes Academy develops citizenship character traits in our students through our character education program that is based on mutual respect for all

7

people. All of these elements combined create citizens who will create, innovate, achieve, and lead in tomorrow’s world. As a member of the Pinecrest Academy network of high quality charter schools, Pinecrest Lakes is fully accredited by AdvancED under the Southern Association of Colleges and Schools Council on Accreditation and School Improvement (SACS-CASI) division. As with all the schools within the network, Pinecrest Lakes places high expectations for student learning and offers multiple opportunities for all students to acquire requisite knowledge, skills, and attitudes in a safe and nurturing environment. FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUND As noted earlier, the School uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the School’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School’s financing requirements. In particular, the unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Most of the School’s operations are funded in the General Fund. The majority of the General Fund revenues are distributed to the School by the District through the Florida Education Finance Program (FEFP), which uses formulas to distribute state funds and an amount of local property taxes (i.e., required local effort) established each year by the Florida Legislature. At the end of the fiscal year, the School’s governmental general fund reported ending fund balance of $385,121. The fund balance unassigned and available for spending at the School’s discretion is $325,223. These funds will be available for the School’s future ongoing operations. Capital Assets The School’s investment in capital assets as of June 30, 2019 amounts to $757,813 (net of accumulated depreciation). This investment in capital assets includes leasehold improvements, textbooks, furniture, fixtures and computer equipment. As of June 30, 2019, the School had approximately $430,000 in long-term debt associated to capital assets and working capital. Capital Improvement Requirements The School maintains a continuous capital improvements program to enhance facilities and update fixtures and equipment as required.

8

Facility and School Location The School entered into a lease agreement for use of facility located at 14012 Old Highway 50, Minneola, FL 34711. Governmental Fund Budget Analysis and Highlights Prior to the start of the School’s fiscal year, the Board of the Charter School adopted an annual budget. A budgetary comparison statement has been provided for total governmental funds (both general fund and special revenue funds) to demonstrate compliance with the School’s budget.

(A charter school under Pinecrest Academy, Inc.)Original Budget Final Budget Actual

REVENUESProgram Revenues Federal sources 424,176$ 525,693$ 527,503$ State capital outlay funding 312,500 400,665 399,838 Lunch program 175,500 179,981 180,146 General Revenues State passed through local 3,886,640 3,910,549 3,910,585 Charges and other revenues 216,000 213,378 213,462 Total Revenues 5,014,816 5,230,266 5,231,534

CURRENT EXPENDITURESComponent Unit Activities Instruction 2,475,878 2,245,986 2,242,677 Student support services 44,150 35,588 32,831 Instruction staff trainning 7,859 5,000 4,479 Board 30,938 33,880 33,558 School administration 577,043 512,253 509,809 Fiscal services 93,750 88,350 88,350 Food services 210,817 213,615 212,387 Central services 126,750 118,918 115,766 Operation of plant 959,305 1,037,420 1,032,584 Maintenance of plant 204,596 150,000 142,585 Community services 72,459 41,865 40,990 Total Current Expenditures 4,803,545$ 4,482,875$ 4,456,016$

Governmental Fund

Most variances occurred as a result of the budget adopted being more conservative than actual results for the year. Requests for Information

This financial report is intended to provide a general overview of the finances of the School. Requests for additional information may be addressed to Ms. Ana Martinez at Academica Dade, LLC, 6340 Sunset Drive, Miami, Florida 33143.

9

Pinecrest Lakes Academy(A charter school under Pinecrest Academy, Inc.)

Statement of Net Position

Assets Governmental Activities

Current assets:Cash and cash equivalents 159,401$ Investments 396,000 Prepaid expenses and other current assets 59,898 Due from other agencies 15,452

630,751

Capital assets, depreciable 1,168,686 Less: accumulated depreciation (410,873)

757,813

Deposit receivable 31,430 Total Assets 1,419,994

Deferred Outflows of Resources -

Liabilities

Current liabilities:Accounts payable 90,303 Salaries and wages payable 155,327

245,630

Long term liabilities:Due to Pinecrest Academy, Inc. 700,000

Total Liabilities 945,630

Deferred Inflows of Resources -

Net PositionNet investment in capital assets 328,047 Unrestricted 146,317

Total Net Position 474,364$

The accompanying notes are an integral part of this financial statement.

June 30, 2019

10


Statement of ActivitiesFor the year ended

Net (Expense) Operating Capital Revenue

Charges for Grants and Grants and and ChangesFUNCTIONS Expenses Services Contributions Contributions in Net PositionGovernmental activities: Instruction 2,450,878$ 119,009$ 58,668$ -$ (2,273,201)$ Student support services 32,831 - - - (32,831) Instruction staff trainning 4,479 - - - (4,479) Board 33,558 - - - (33,558) School administration 509,809 - - (509,809) Fiscal services 88,350 - - - (88,350) Food services 237,325 86,297 93,849 - (57,179) Central services 115,766 - - - (115,766) Operation of plant 1,042,048 33,865 - 399,838 (608,345) Maintenance of plant 149,485 - 28,750 - (120,735) Community services 40,990 - - - (40,990) Total governmental activities 4,705,519 239,171 181,267 399,838 (3,885,243)

General revenues:FTE and other nonspecific revenues 3,910,585 Interest and other revenue 60,588

Change in net position 85,930

Net position, beginning 388,434Net position, ending 474,364$


Program Revenues

June 30, 2019

11


Balance Sheet - Governmental Funds

General FundSpecial

Revenue Fund

Total Governmental

Funds

AssetsCash and cash equivalents 159,401$ -$ 159,401$ Investments 396,000 - 396,000 Due from other agencies - 15,452 15,452 Due from fund 15,452 - 15,452 Prepaid expenses and other current assets 59,898 - 59,898

Total Assets 630,751 15,452 646,203

Deferred Outflows of Resources - - -

LiabilitiesSalaries and wages payable 155,327 - 155,327 Accounts payable 90,303 - 90,303 Due to fund - 15,452 15,452

Total Liabilities 245,630 15,452 261,082

Deferred Inflows of Resources - - -

Fund balanceNonspendable, not in spendable form 59,898 - 59,898 Unassigned 325,223 - 325,223

385,121 - 385,121 Total Liabilities, Deferred Inflows of Resources and Fund Balance 630,751$ 15,452$ 646,203$


June 30, 2019

12


Reconciliation of the Governmental Fund Balance Sheet to the Statement of Net PositionJune 30, 2019

Total Fund Balance - Governmental Funds 385,121$

757,813

31,430

Total Net Position - Governmental Activities 474,364$


Capital assets of $1,168,686 net of accumulateddepreciation of $410,873 used in governmental activitiesare not financial resources and therefore are not reported inthe fund.

Amounts reported for governmental activities in the statement of net position aredifferent because:

Deposits used in governmental activities are not financialresources and therefore are not reported in the fund.

13


Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental FundsFor the year ended June 30, 2019

General FundCapital Projects

Fund (Non-Major)

Special Revenue Fund

Total Governmental

FundsRevenues: State capital outlay funding -$ 399,838$ -$ 399,838$ State passed through local 3,910,585 - - 3,910,585 Federal sources - - 527,503 527,503 Lunch program - - 180,146 180,146 Interest and other revenue 213,462 - - 213,462 Total Revenues 4,124,047 399,838 707,649 5,231,534

Expenditures:Current Instruction 2,228,282 - 14,395 2,242,677 Student support services 32,831 - - 32,831 Instruction staff trainning 4,479 - - 4,479 Board 33,558 - - 33,558 School administration 506,480 - 3,329 509,809 Fiscal services 88,350 - - 88,350 Food services - - 212,387 212,387 Central services 115,766 - - 115,766 Operation of plant 632,746 399,838 - 1,032,584 Maintenance of plant 142,585 - - 142,585 Community services 40,990 - - 40,990 Capital Outlay: Other capital outlay 160,671 - - 160,671 Total Expenditures 3,986,738 399,838 230,111 4,616,687

Excess (deficit) of revenues over expenditures 137,309 - 477,538 614,847

Other financing sources (uses)Transfers in (out) 477,538 - (477,538) - Repayment of long term debt (359,002) - - (359,002)

Net change in fund balance 255,845 - - 255,845

Fund Balance at beginning of year 129,276 - - 129,276

Fund Balance at end of year 385,121$ -$ -$ 385,121$


14


Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balanceof Governmental Funds to the Statement of ActivitiesFor the year ended June 30, 2019

Net Change in Fund Balance - Governmental Funds 255,845$

(88,832)

(440,845)

359,002

Change in Net Position of Governmental Activities 85,170$


Amounts reported for governmental activities in the statement of activities aredifferent because:

Governmental funds report capital outlays as expenditures.However, in the statement of activities, the cost of thoseassets is allocated over their estimated useful lives asdepreciation expense. This is the amount by which capitaloutlays of $160,671 differed from depreciation expense of$249,503.

The proceeds from debt issuance provide current financialresources to governmental funds, but issuing debt increaseslong-term liabilities in the statement of net position.Repayment of debt principal is an expenditure in thegovernmental funds, but the repayment reduces long-termliabilities in the statement of net position. This is the amountby which repayments of $359,002 differed proceeds of $-0-.

Revenues are recognized using the full accrual basis ofaccounting in the government-wide statements. However,revenues are recognized when they are measurable andavailable in the governmental funds. These revenues met therecognition criteria during the current period and therefore,are reported in the funds.

15


Statement of Net Position - Fiduciary Funds

Agency fundsAssets

Cash 43,824$

Total Assets 43,824

Deferred Outflows of Resources -

Liabilities

Due to students and clubs 43,824

Total Liabilities 43,824

Deferred Inflows of Resources -

Net Position -$


June 30, 2019

16

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 1 – Summary of Significant Accounting Policies Reporting Entity Pinecrest Lakes Academy (the "School"), is a is a component unit of the School Board of Lake County, Florida (the “District”). The School’s charter is held by Pinecrest Academy, Inc., a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, the Florida Not-For-Profit Corporation Act. The governing body of the School is the board of directors of Pinecrest Academy, Inc., which is composed of five members and also governs other charter schools. The board of directors has determined that no component units exist that would require inclusion in the School’s financial statements. The general operating authority of the School is contained in Section 1002.33, Florida Statutes. The School operates under a charter granted by the sponsoring district, the School Board of Lake County, Florida. The current charter expires on June 30, 2021 and it can be renewed in accordance with the law. A charter can also be terminated before its date of expiration for reasons set forth in the charter and Section 1002.33 of the Florida Statutes. The School, serves students from kindergarten through fifth grades and is funded by the District. These financial statements are for the year ended June 30, 2019, when on average 588 students were enrolled for the school year. Basis of presentation The School’s accounting policies conform to accounting principles generally accepted in the United States as applicable to state and local governments. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The School does not have any items that qualify for reporting in this category. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The School does not have any items that qualify for reporting in this category.

17

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 1 – Summary of Significant Accounting Policies (continued) Government-wide and Fund Financial Statements Government-wide Financial Statements The government-wide financial statements include the statement of net position and the statement of activities. These statements report information about the School as a whole. Any internal interfund activity has been eliminated from these financial statements. Both statements report only governmental activities as the School does not engage in any business type activities. These statements do not include fiduciary funds. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include: (1) charges for services, such as food service and student activity fees; (2) operating grants such as the National School Lunch Program, Federal grants, and other state allocations; and (3) capital grants specific to capital outlay. Other revenue sources not included with program revenues are reported as general revenues. Fund Financial Statements Fund financial statements are provided for governmental and fiduciary funds. The operations of the funds are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflow of resources, liabilities, deferred inflows of resources, equity, revenues and expenditures. The School reports the following major governmental funds with all non-major funds aggregated in a single column:

General Fund - is the School’s primary operating fund. It accounts for all financial resources of the school, except those required to be accounted for in another fund. Special Revenue Fund – accounts for specific revenue, such as the federal lunch program and other grants that are restricted to expenditures for particular purposes.

Additionally, the School reports separately the following fiduciary fund types:

Agency Fund – accounts for resources of the School’s Internal Fund, which is used to administer monies collected at the schools in connection with school, student athletics, class, and club activities.

18

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 1 – Summary of Significant Accounting Policies (continued) Measurement Focus and Basis of Accounting The financial statements of the School are prepared in accordance with generally accepted accounting principles (GAAP). The School’s reporting entity applies all relevant Governmental Accounting Standards Board (GASB) Codification of Accounting and Financial Reporting Guidance. The government-wide statements report using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The School recognizes assets of non-exchange transactions in the period when the underlying transaction occurs, when an enforceable legal claim has arisen, or when all eligibility requirements are met. Revenues are recognized, on the modified accrual basis, when they are measurable and available. Non-exchange transactions occur when the school provides (or receives) value to (from) another party without receiving (or giving) equal or nearly equal value in return. Most donations are examples of non-exchange transactions. Revenues from grants and donations are recognized on the accrual basis, in the fiscal year in which all eligibility requirements have been satisfied. Governmental fund financial statements report using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. “Measurable” means the amount of the transaction can be determined. “Available” means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The School considers revenues to be available if they are collected within 60 days of the end of the fiscal year. Florida Education Finance Program (FEFP) revenues are recognized when received. A one-year availability period is used for revenue recognition for all other governmental fund revenues. Charges for services and fees are recognized when cash is collected as amounts are not measurable. When grant terms provide that the expenditure of funds is the prime factor for determining eligibility for federal, state, and other grant funds, revenue is recognized at the time the expenditure is made. Expenditures are recorded when the related fund liability is incurred, except for long-term debt principal and interest which are reported as expenditures in the year due. Agency fund assets and liabilities are accounted for on the accrual basis of accounting. Budgets and Budgetary Accounting In compliance with Florida Statutes, the Board of Directors adopts an annual budget using the modified accrual basis of accounting. During the fiscal year, expenditures were controlled at the object level (e.g. salaries and benefits, purchased services, materials and supplies and capital outlay) within each activity (e.g. instruction, pupil personnel services and school administration). Revisions to the annual budget are approved by the Board.

19

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 1 – Summary of Significant Accounting Policies (continued) Cash, Cash Equivalents and Investments Cash and cash equivalents are considered to be cash on hand, demand deposits, non-marketable time deposits with maturities of three months or less when purchased, and money market/savings accounts. The School has not adopted a formal deposit and investment policy that limits the School’s allowable deposits or investments and address specific types of risk; however the School invests excess deposit funds in a government money market mutual fund. The School has adopted GASB Codification Section 3100 Fair Value Measurement and Application (see Note 2). Inter-fund Transfers Inter-fund receivables/payables (“due from/to”) are short-term balances that represent reimbursements between funds for payments made by one fund on behalf of another fund. Due from Other Governments or Agencies Amounts due to the School by other governments or agencies are for grants or programs under which the services have been provided by the School. Capital Assets The School’s property, plant and equipment with useful lives of more than one year are stated at historical cost and comprehensively reported in the statement of net position in the government-wide financial statements. Donated capital assets are recorded at their estimated fair market value on the date donated. The School generally capitalizes assets with a cost of $500 or more. Building improvements, additions and other capital outlays that significantly extend the useful life of an asset are capitalized. The costs of normal maintenance and repairs that do not add to the asset value or materially extend useful lives are not capitalized. Capital assets are depreciated using the straight-line method. When capital assets are disposed, the cost and applicable accumulated depreciation are removed from the respective accounts, and the resulting gain or loss is recorded in operations. Estimated useful lives, in years, for depreciable assets are as follows:

Improvements 20 Years Furniture, Equipment, and Computers 5 Years Audiovisual and Software 3-5 Years

20

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 1 – Summary of Significant Accounting Policies (continued) Compensated Absences The School grants a specific number of sick days. Full time instructional employees are eligible to one day per month to up to ten days of active work during the ten-month period (a “benefit year”). In the event that available time is not used by the end of the benefit year, employees may “rollover” all unused days for use in future benefit years. Employees may “cash out” unused sick days however, the employees may only cash out if they have used three days or less of their sick leave in that benefit year. Employees may not cash out more than ten days per school year and are required to always maintain a minimum of twenty-one unused days in order to cash out. The cash out value is eighty percent of their current daily rate. There is no termination payment for accumulated unused sick days. GASB Codification Section C60, Accounting for Compensated Absences, provides that compensated absences that are contingent on a specific event that is outside the control of the employer and employee should be accounted for in the period those events take place. Accordingly, these financial statements do not include an accrual for compensated absences available to be used in future benefits years. The School also provides certain days to be used for specific personal matters such as family death and jury duty. Because the use of such days is contingent upon those events taking place and such events are out of the control of both the employer and the employee, there is no accrual for such days.

Revenue Sources Revenues for current operations are received primarily from the State through the District pursuant to the funding provisions included in the School's charter. In accordance with the funding provisions of the charter and Section 1002.33, Florida Statutes, the School will report the number of full-time equivalent (FTE) students and related data to the District. Under the provisions of Section 1011.62, Florida Statutes, the District reports the number of the full-time equivalent (FTE) students and related data to the Florida Department of Education (FDOE) for funding through the FEFP. Funding for the School is adjusted during the year to reflect the revised calculations by the FDOE under the FEFP and the actual weighted full-time equivalent students reported by the School during the designated full-time equivalent student survey periods. After review and verification of FTE reports and supporting documentation, the FDOE may adjust subsequent fiscal period allocations of FEFP funding for prior year errors disclosed by its review as well as to prevent statewide allocations from exceeding the amount authorized by the Legislature. Normally, such adjustments are treated as reductions of revenue in the year the adjustment is made. The School receives state funds through the District under charter school capital outlay funding pursuant to Section 1013.62, Florida Statutes. Funds are based on a capital outlay plan submitted to the District and are to be used for lease of school facilities. In addition, the School may receive a portion of the local capital improvement ad valorem tax revenues levied by the District.

21

Pinecrest Lakes Academy (A Charter School under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 1 – Summary of Significant Accounting Policies (continued) Finally, the School also receives Federal awards for the enhancement of various educational programs. Federal awards are generally received based on applications submitted to and approved by various granting agencies. For Federal awards in which a claim to these grant proceeds is based on incurring eligible expenditures, revenue is recognized to the extent that eligible expenditures have been incurred. Any excess amounts are recorded as deferred revenues until expended. Additionally, other revenues may be derived from various fundraising activities and certain other programs. Net Position and Fund Balance Classifications Government-wide financial statements Equity is classified as net position and displayed in three components:

a) Net investment in capital assets- consists of capital assets net of accumulated depreciation reduced by the outstanding balances of any borrowings that are attributable to the acquisition or improvement of those assets.

b) Restricted net position - consists of balances with constraints placed on their use either by external groups such as creditors, grantors, contributors or laws or regulations of other governments.

c) Unrestricted net positions - all other balances that do not meet the definition of "restricted" or "net investment in capital."

Fund financial statements GASB Codification Section 1800.142, Fund Balance Reporting and Governmental Fund Type Definitions, defines the different types of fund balances that a governmental entity must use for financial reporting purposes. GASB requires the fund balance amounts to be properly reported within one of the fund balance categories list below:

a) Nonspendable – includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Consists of fund balance associated with inventories, prepaid expenses, long-term loans and notes receivable, and property held for resale (unless the proceeds are restricted, committed, or assigned). At year end all nonspendable fund balances pertained to assets not in spendable form.

b) Restricted – this classification includes fund balance category amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation. There are no restricted fund balances at year end.

c) Committed - fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the School’s Board of Directors. There are no committed fund balances at year end.

22

Pinecrest Lakes Academy (A Charter School under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 1 – Summary of Significant Accounting Policies (continued)

d) Assigned - fund balance classification that is intended to be used by the School’s management for specific purposes but do not meet the criteria to be classified as restricted or committed. There are no assigned fund balances at year end.

e) Unassigned – portion of the fund balance that has not been restricted, committed or assigned for a specific purpose. This is the residual classification for the School’s general fund.

Order of Fund Balance Spending Policy The School’s policy is to apply expenditures against non-spendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and unassigned fund balance at the end of the fiscal year by adjusting journal entries. First Non-spendable fund balances are determined. Then restricted fund balances for specific purposes are determined (not including non-spendable amounts). Then any remaining fund balance amounts for the non-general funds are classified as unassigned fund balance. It is possible for the non-general funds to have negative unassigned fund balance when non-spendable amounts plus the restricted fund balances for specific purposes amounts exceed the positive fund balance for the non-general fund. Long –Term Debt In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position. In the fund financial statements, governmental fund types report the face amount of debt issued as other financing sources. Income Taxes Pinecrest Academy, Inc. qualifies as a tax-exempt organization under Internal Revenue Code Section 501(c)(3), and is, therefore, exempt from income tax. Accordingly, no tax provision has been made in the accompanying financial statements. Subsequent Events In accordance with GASB Codification Section 2250.106, the School has evaluated subsequent events and transactions for potential recognition or disclosure through September 30, 2019, which is the date the financial statements were available to be issued. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.

23

Pinecrest Lakes Academy (A Charter School under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 2 – Cash, Cash Equivalents and Investments Deposits The School maintains its cash and cash equivalents in two financial institutions. As of June 30, 2019, the School’s deposits consisted of cash balances of $77,893. Deposits at FDIC-insured institutions are insured up to $250,000 per depositor, per financial institution. The School is a charter school under Pinecrest Academy, Inc., which also operates various other charter schools. All bank accounts are opened under the account ownership of Pinecrest Academy, Inc., therefore, bank balances at times may potentially be in excess of FDIC coverage. As of June 30, 2019, bank balances in potential excess of FDIC coverage was approximately $204,757; including fiduciary account bank balances. Investments The School categorizes its fair value measurements with the fair value hierarchy established by GASB Codification Section 3100 Fair Value Measurement and Application. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in markets for identical assets: Level 2 inputs are significant other observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.); Level 3 inputs are significant unobservable inputs

At June 30, 2019, the School has the following recurring fair value measurements:

• Government money market mutual fund of $1,000,000 valued using Level 2 inputs. The government money market mutual fund values its portfolio securities at amortized cost which approximates fair value. The government money market mutual fund primarily invests in cash, high quality, short-term U.S. government securities and/or repurchase agreements that are collateralized fully by government securities that have been valued by the fund as Level 2. As of As of July 31, 2019, maturities of the fund’s portfolio holdings are approximately 81% within 30 days. Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of investments in a single issuer. The School manages its exposure to credit risk by limiting investments to highly rated government money market mutual funds. The fund is rated Aaa-mf by Moody’s. Custodial credit risk is the risk that in the event of a failure of a depository financial institution or counterparty that is in possession of investment or collateral securities, the School will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. For an investment, custodial credit risk is the risk that in the event of the failure of the counterparty to a transaction, the School will not be able to recover the value of investments or collateral securities that are in the possession of an outside party.

24

Pinecrest Lakes Academy (A Charter School under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 2 – Cash, Cash Equivalents and Investments (Continued) At June 30, 2019, all of the School’s investments in government money market mutual funds were held in a separate account and designated as assets of the School. Interest rate risk is the risk that changes in interest rate will adversely affect the fair value of an investment. The School manages its exposure to declines in fair values by limiting all investments to government money market mutual funds that can be redeemed daily. Note 3 –Capital Assets The following schedule provides a summary of changes in capital assets, acquired substantially with public funds, for the year ended June 30, 2019:

Balance Balance07/01/18 Additions Retirements 06/30/19

Capital Assets, depreciable:Furniture, equipment and textbooks 916,999$ 147,215$ -$ 1,064,214$ Audio visual and software 86,872 13,456 - 100,328 Motor vehicles 4,144 - - 4,144 Total Capital Assets 1,008,015 160,671 - 1,168,686

Less Accumulated Depreciation:Furniture, equipment and textbooks (145,084) (228,163) - (373,247) Audio visual and software (15,526) (20,511) - (36,037) Motor vehicls (760) (829) - (1,589) Total Accumulated Depreciation (161,370) (249,503) - (410,873)

Capital Assets, net 846,645$ (88,832)$ -$ 757,813$

For the fiscal year ended June 30, 2019, depreciation expense is allocated in the Statement of Activities by function as follows: InstructionFood service 24,938 Operation of plantMaintenance of Plant 6,900

Total Depreciation Expense

208,201$

$ 249,503

9,464

25

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 4 –Education Service and Support Provider Academica Dade, LLC, an education service and support provider, offers administrative services to the School including, but not limited to, facility design, staffing recommendations, human resource coordination, regulatory compliance, legal and corporate upkeep, maintenance of the books and records, bookkeeping, budgeting financial reporting and virtual education services. The agreement calls for a fee on a per student basis.The agreement is for a period of five years, through June 30, 2021, and unless terminated by the board shall be renewed along with any renewals to the charter agreement. During the year ended June 30, 2019, the School incurred $265,050 in fees. Academica Dade, LLC is located at 6340 Sunset Drive, Miami, Florida 33143. Note 5 –Transactions With Other Divisions of Pinecrest Academy, Inc. The School has received long term, non-interest bearing advances from Pinecrest Academy, Inc., payable three years from the date of disbursement. The following schedule provides a summary of changes in long-term advances for the year ended June 30, 2019:

Balance Balance07/01/18 Repayments Proceeds 06/30/19

Due to Pinecrest Academy, Inc. 1,059,002$ (359,002)$ -$ 700,000$ Total Long term advances 1,059,002$ (359,002)$ -$ 700,000$

Pinecrest Academy, Inc. charges its affiliated schools an assessment for shared corporate costs and accreditation expenses. Pinecrest Lakes Academy paid Pinecrest Academy, Inc. $88,350 in connection with these charges during the year. Note 6 – Commitments, Contingencies and Concentrations On March 1, 2017, Pinecrest Academy, Inc. entered into a lease agreement with Minneola School Development, LLC for 45,976 square feet of space to be used as the School facility. The agreement continues through June 30, 2037 with an option to renew the lease for two additional term of five years each. The agreement calls for an annual minimum rent of $873,544 adjusted annually based on the Consumer Price Index (CPI) plus additional property costs including repairs, maintenance and insurance.

26

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 6 – Commitments, Contingencies and Concentrations (continued) For the second lease year ending on June 30, 2019, the fixed rent was reduced by an enrollment discount of $16,667 per month during the year. Under the above agreements, the School must meet certain covenants and requirements, including a “Fixed Charge Coverage Ratio” of not less than 1.10 to 1.00. The landlord is an affiliate of the School’s education service and support provider (See Note 4). For 2019, rent expense totaled $698,012 related to the facility leases. Future minimum lease payments under the lease agreement is as follows:

Year2020 903,600$ 2021 903,600$ 2022 903,600$ 2023 903,600$ 2024 903,600$

2025-2029 4,518,000$ (Total for five year period)2030-2034 4,518,000$ (Total for five year period)2035-2037 2,710,800$ (Total for three year period)

Contingencies and Concentrations The School receives substantially all of its funding from the District under the Florida Education Finance Program (FEFP), which is based in part on a computation of the number of full-time equivalent (FTE) students attending different instructional programs. The accuracy of FTE student data submitted by individual schools and used in the FEFP computations is subject to audit by the state and, if found to be in error, could result in refunds to the state or in decreases to future funding allocations. Additionally, the School participates in a number of federal, state and local grants which are subject to financial and compliance audits. It is the opinion of management that the amount of revenue, if any, which may be remitted back to the state due to errors in the FTE student data or the amount of grant expenditures which may be disallowed by grantor agencies would not be material to the financial position of the School. Pursuant to the charter school contract with the School District, the District withholds an administrative fee of 5% of the qualifying revenues of the School. For the year ended June 30, 2019, administrative fees withheld by the School District totaled $83,542.

27

Pinecrest Lakes Academy (A charter school under Pinecrest Academy, Inc.) Notes to Financial Statements June 30, 2019 Note 7 – Risk Management The School is exposed to various risks of loss related to torts, thefts of, damage to and destruction of assets, errors and omissions and natural disasters for which the School carries commercial insurance. Settlement amounts have not exceeded insurance coverage for the past years. In addition, there were no reductions in insurance coverage from those in the prior year. The School has entered into a strategic relationship with ADP TotalSource, Inc., a human resource management firm, typically known as “Professional Employer Organization” (PEO). Under a co-employment agreement, the PEO is the employer of record and is responsible for administering payroll, payroll taxes, provide employee benefits and assist with human resources and risk management. Accordingly, certain human resource related risks are transferred to the PEO. Nevertheless, the School may be subject to risks, including loss, penalties and fines related to employment practices, administrative error and omissions. Note 8 – Inter-fund Transfers Inter-fund transfers between governmental funds as of June 30, 2019 consist of the following:

General Fund

Special Revenue

Fund To fund lunch deficit (32,241)$ 32,241$ Reimbursement from CSP grant for prior period expenditures 440,085 (440,085) Reimbursement from federal grants for prior period expenditures 69,694 (69,694)

477,538$ (477,538)$

Due from/(Due to) fund balances are as follows: General

Fund

Special Revenue

Fund Due to General Fund from Special Revenue Fund for Title II 12,111$ (12,111)$ Due to General Fund from Special Revenue Fund for CSP grant 3,341 (3,341) Total Due from/(Due to) 15,452$ (15,452)$ Note 9 – Defined Contribution Retirement Plan The School’s personnel, who are leased through ADP Total Source Group, Inc., are eligible to participate in a defined contribution 401(k) plan sponsored by the leasing company, covering employees who meet certain age and tenure requirements. Under the ADP TotalSource Retirement Savings Plan (the “Plan”), the School provides a match of 100% of the employees contribution up to 4% of the employee’s compensation. The School contributed $34,355 to the Plan for the year ended June 30, 2019. The School does not exercise any control or fiduciary responsibility over the Plans’ assets, which are administered by Voya.

REQUIRED SUPPLEMENTARY INFORMATION

28


Statement of Revenues, Expenditures, and Changes in Fund BalanceFor the year ended June 30, 2019

Original Budget Final Budget ActualREVENUES State passed through local 3,886,640$ 3,910,549$ 3,910,585$ Interest and other revenue 216,000 213,378 213,462 Total Revenues 4,102,640 4,123,927 4,124,047

EXPENDITURESCurrent: Instruction 2,432,878 2,202,393 2,228,282 Student support services 44,150 35,588 32,831 Instruction staff trainning 7,859 5,000 4,479 Board 30,938 33,880 33,558 School administration 572,043 508,753 506,480 Fiscal services 93,750 88,350 88,350 Central services 126,750 118,918 115,766 Operation of plant 646,805 636,755 632,746 Maintenance of plant 204,596 150,000 142,585 Community services 72,459 41,865 40,990 Total Current Expenditures 4,232,228 3,821,502 3,826,067 Excess/(Deficit) of Revenues Over Current Expenditures (129,588) 302,425 297,980

Capital Outlay 163,000 163,000 160,671 Total Expenditures 4,395,228 3,984,502 3,986,738

Excess/(Deficit) of Revenues Over Expenditures (292,588) 139,425 137,309

Other financing sources (uses):Transfers in (out) 340,859 444,966 477,538

Repayment of longt term debt - (359,002) (359,002)

Net change in fund balance 48,271 225,389 255,845

Fund Balance at beginning of year 129,276 129,276 129,276

Fund Balance at end of year 177,547$ 354,665$ 385,121$

Notes to Budgetary Comparison Schedule

General Fund

An annual budget is adopted on the modified accrual basis of accounting, consistent with generally acceptedaccounting principles. Amendments to the budget can only be made with the approval of the Board of Directors.

29


Statement of Revenues, Expenditures, and Changes in Fund BalanceFor the year ended June 30, 2019

Original Budget Final Budget ActualREVENUES Federal sources 424,176$ 525,693$ 527,503$ Lunch program 175,500 179,981 180,146 Total Revenues 599,676 705,674 707,649

EXPENDITURESCurrent: Instruction 43,000 43,593 14,395 School administration 5,000 3,500 3,329 Food services 210,817 213,615 212,387 Total Current Expenditures 258,817 260,708 230,111 Excess of Revenues Over Current Expenditures 340,859 444,966 477,538

Capital Outlay - - - Total Expenditures 258,817 260,708 230,111

Excess/(Deficit) of Revenues Over Expenditures 340,859 444,966 477,538

Other financing sources (uses)Transfers in (out) (340,859) (444,966) (477,538)

Net change in fund balance - - -

Fund Balance at beginning of year - - -

Fund Balance at end of year -$ -$ -$

Notes to Budgetary Comparison Schedule

Special Revenue Fund

An annual budget is adopted on the modified accrual basis of accounting, consistent with generally acceptedaccounting principles. Amendments to the budget can only be made with the approval of the Board of Directors.

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors of Pinecrest Lakes Academy Minneola, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of Pinecrest Lakes Academy (the “School”) as of, and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School’s basic financial statements and have issued our report thereon dated September 30, 2019. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the School’s internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the School’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

31

Compliance and Other Matters As part of obtaining reasonable assurance about whether the School’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that were reported to management in a separate management letter dated September 30, 2019 pursuant to Chapter 10.850, Rules of the Auditor General. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

CERTIFIED PUBLIC ACCOUNTANTS

Coral Gables, Florida September 30, 2019

MANAGEMENT LETTER Board of Directors of Pinecrest Lakes Academy Minneola, Florida Report on the Financial Statements We have audited the financial statements of Pinecrest Lakes Academy as of and for the fiscal year ended June 30, 2019 and have issued our report thereon dated September 30, 2019. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and Chapter 10.850, Rules of the Auditor General. Other Reporting Requirements We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in those reports and schedules, which are dated September 30, 2019, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Refer to Financial condition and management section for status of prior year findings and recommendations. Official Title Section 10.854.(1)(e)5., Rules of the Auditor General, requires the name or official title of the entity and the school code assigned by the Florida Department of Education be disclosed in this management letter. The official title and the school code assigned by the Florida Department of Education of the entity is Pinecrest Lakes Academy, 9041.

33

Financial Condition and Management Sections 10.854(1)(e)2 and 10.855(11), Rules of the Auditor General, require us to apply appropriate procedures and communicate whether or not Pinecrest Lakes Academy has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identify the specific condition(s) met. In connection with our audit, we determined that Pinecrest Lakes Academy did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.854(1)(e)6.a and 10.855(12), Rules of the Auditor General, we applied financial condition assessment procedures for Pinecrest Lakes Academy. It is management’s responsibility to monitor Pinecrest Lakes Academy financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Section 10.854(1)(e)3., Rules of the Auditor General, requires that we communicate any recommendation to improve financial management. In connection with our audit, we had the following recommendations:

ML – 19-01 CAPITAL ASSETS

Criteria: The School is required to maintain an inventory of capital assets purchased with public funds in accordance with local, state or federal regulations.

Condition: We noted that the School does not have a formal process for reconciling

the capital assets inventory report to the capital assets of the Schools trial balance.

Cause: The condition results from school personnel not consistently performing

an inventory of all fixed assets and reconciling to the School’s trial balance.

Effect: Failure to perform the procedures mentioned above could result in a

misstated annual property inventory.

Recom- mendation: We recommend that the School perform an annual inventory of all capital

assets and reconcile to the capital asset ledgers recorded on the School’s books.

Views of Responsible Officials: Management will adhere to auditor’s recommendation. The ESSP is

assisting the Schools with identifying the proper support to ensure schools are in full compliance with inventory requirements.

34

Status of Prior Year Findings and Recommendations:

ML – 2018-01 INTERNAL ACCOUNT DEPOSITS (This was a finding in fiscal year 2018, the School’s first year of operations.)

Condition: We noted that purchase orders and check requisition forms were not being

routinely used, check signing policies were not routinely adhered to and several deposits were missing supporting documentation.

Recom- mendation: We recommend that the School adheres to its internal control policies and

procedures relating to the internal account collection of money, deposit procedures and purchases as well as proper use of general purpose funds. In addition, we recommend the School’s treasurer and staff accepting cash receipts or making purchases be provided additional internal account training to ensure compliance with these policies.

Status: During current year testing of deposits, we noted no exceptions with

respect to supporting documentation. However, some recap sheets did not have signature evidence of review of responsible official.

During current year testing of disbursements, we noted that the check signing finding was repeated. In addition, most disbursements tested had purchase order dates after the date of purchase and several disbursements did not agree to the invoice amount.

Views of Responsible Officials: See attached management response.

Transparency Sections 10.854(1)(e)7 and 10.855(13), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether Pinecrest Lakes Academy maintains on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determined that Pinecrest Lakes Academy maintained on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. Additional Matters Section 10.854(1)(e)4., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings.

35

Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representatives, the Florida Auditor General, School Board of Lake County, Federal and other granting agencies, the Board of Directors, and applicable management and is not intended to be and should not be used by anyone other than these specified parties.

CERTIFIED PUBLIC ACCOUNTANTS

Coral Gables, Florida September 30, 2019

BOARD OF DIRECTORSSCHOOL ADMINISTRATIONChristina Alcalde, PrincipalOverview of the Financial StatementsFund Financial StatementsNotes to Financial StatementsGOVERNMENT-WIDE FINANCIAL ANALYSISFINANCIAL ANALYSIS OF THE GOVERNMENT’S FUND

Governmental Fund Budget Analysis and HighlightsPrior to the start of the School’s fiscal year, the Board of the Charter School adopted an annual budget. A budgetary comparison statement has been provided for total governmental funds (both general fund and special revenue funds) to demonstrate com...

Most variances occurred as a result of the budget adopted being more conservative than actual results for the year.Requests for Information

1¾ « ˆa ‹ » » ¿ Á Á g:appsdatafnormal...jun 09, 2017 · pinecrest lakes academy (a...

Documents